UAE considers adding more 'harmful' products to excise tax list

April 1, 2019 761

Tobacco products and carbonated and energy drinks doubled in price following the introduction of excise tax

The UAE is mulling the inclusion of new products on its excise tax list, according to a statement by the Ministry of Finance, which implemented the fee on three categories in October 2017.

The ministry is conducting a joint study with officials in Saudi Arabia “on the addition of new goods to the selective tax list, as well as to determine tax rates on certain harmful substances,” its statement said.

While it did not share details of the goods it is considering to add to the tax list, it said in 2017 that it aims to reduce the consumption of harmful substances.

These include tobacco and tobacco products and carbonated and energy drinks, which are currently listed under the excise tax and have doubled in price since the fee’s introduction.

Change consumer behaviour

The UAE government said at the time it implemented the tax that it aims to boost state revenues and change consumer behaviour to reduce obesity and diabetes rates in the Gulf country.

In March this year, the Dubai Refreshment Company revealed that the implementation of VAT and the excise tax resulted in a 54% net profit drop and 26% revenue drop in 2018.

In the statement, Dubai Refreshment Company, which is the sole bottler and distributor for PepsiCo in the UAE, said that the company was also “forced to pass these taxes to the consumer”.

Last year, the European Union, Switzerland and the United States complained at the World Trade Organisation about the excise tax imposed by the UAE, Saudi Arabia and Bahrain on carbonated and energy drinks.

According to notes of a WTO meeting, concerns were raised about the 100 percent excise duty on energy drinks and a 50 percent duty on other carbonated drinks.

The EU, Switzerland and US claimed that there is no rationale for applying duties on these products, and no indication that the measures would be modified to make them consistent with the WTO.

Arabian Business